Patron Survey Finds ‘Regifting’ is Widespread

New Holiday Campaign for Patron Tequila Seeks to ‘Eliminate Regifting’

margarita, vault
From the Tequila Aficionado & TequilaRack Vaults

tequila, LAS VEGAS Nov. 16, 2009 /PRNewswire/ — A recent survey commissioned by The Patron Spirits Company, importers and marketers of ultra-premium Patron tequila, has found that 68 percent of people claim they’ve regifted, or considered regifting, a holiday present.Regifting is defined as the act of taking a gift that has been received and giving it to somebody else, sometimes in the guise of a new gift.

The national poll, conducted among 1,040 adults ages 21+ by Russell Research in late October, also revealed that co-workers are the most common recipients of regifted gifts, followed by family members and service providers (such as mail carriers, home maintenance people, etc.)

Eliminate Regifting With Better Gifts

“People may not always admit it, but regifting is clearly a common practice, especially around the holidays,” says Patron’s brand director, Jennifer Long. “So this holiday season, we decided to tackle this familiar issue head-on by reminding people that if they give the gift of Patron, they can ‘Eliminate Regifting.'”

The Patron “Eliminate Regifting” initiative runs from mid-November through year-end, and includes outdoor advertising in cities across the country, targeted holiday-themed magazine ads, online promotions, and in-store displays (complete with baskets of red bows for consumers to use to adorn their gift purchase). Patron’s holiday efforts also include easy-to-prepare seasonal drink recipe suggestions for at- home entertaining. The recipes use Patron tequilas and Patron XO Cafe coffee and tequila liqueur, and reinforce the high quality and versatility of these ultra-premium spirits.

Patron’s holiday gift-giving survey also asked people what they believe is the most common reason for a person to give a bad gift (those that might end up in the regifting pile). The majority of respondents cited “lack of creativity” as the key reason for giving poor gifts, followed by “procrastination.”

The Perfect Hostess Gift

The poll also found that most adults consider a bottle of top-shelf spirits or wine to be the perfect gift to offer to the host of a holiday party.

“High-quality spirits like Patron are always appreciated gifts,” adds Long.

“Whether for a friend or family member, or for that perfect holiday party or get- together, giving a bottle of ultra-premium Patron tequila always reflects well on both the recipient and the gift-giver.”

Simply Perfect in every way, Patron tequila is an ultra-premium luxury white spirit that’s delicious on the rocks and mixes flawlessly into most any cocktail. From the highest-quality Weber Blue agave plants grown in the highlands of Jalisco, Mexico, to the centuries-old distillation process to the signed, handcrafted glass bottles, Patron is produced with unparalleled attention to detail. Imported and marketed by The Patron Spirits Company, brands in the portfolio consist of Gran Patron Burdeos, Gran Patron Platinum, Patron Silver, Patron Reposado, Patron Anejo, Patron XO Cafe (tequila and coffee liqueur), and Patron Citronge (extra fine orange liqueur), as well as Pyrat Pistol, Pyrat XO Reserve, and Pyrat Cask 1623 Caribbean rums, and Ultimat ultra-premium vodka. For more information, please visit www.patronspirits.com. Or to give a bottle of Patron for the holidays, visit www.patrongift.com.

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Originally posted November 16, 2009 by TequilaRack.

Please visit TequilaRack, a member of the Tequila Aficionado Flight of Sites.

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Tequila Aficionado Media Presents Last Tequila Standing

national tequila day, last tequila standing, tequila aficionado, TV show, reality show

First ever Tequila Reality Show kicks off on National Tequila Day!

For Immediate Release!

In 2011, eighteen tequila start ups had vied to be crowned the top Brand Of Promise(TM) in the world’s first broadcasted Tequila Reality Show.

Tequila Aficionado Media Presents Last Tequila Standing

July, 2015, San Antonio, TX:  Starting July 24, 2015, National Tequila Day, 45 exclusive episodes of Last Tequila Standing will be streamed daily over Tequila Aficionado Media’s website and on-demand over its own YouTube playlist, as well as featured throughout all of its powerful social networks.

“Through the expansion of opportunities on the Web, and Tequila Aficionado

Last Tequila Standing.
Last Tequila Standing.

Media’s own explosive growth, we are proud to present for your enjoyment, Last Tequila Standing,” declared Tequila Aficionado’s CEO, M.A. “Mike” Morales.

Never-before-seen raw footage of some of the tequila industry’s most promising labels will be aired.  Each will relate their start up stories and demonstrate their tasty signature cocktails, too.

Colorful brand owners, master distillers, and top flight brand ambassadors took the stage with their enduring tequilas, many of which are still thriving even in 2015’s more competitive tequila market.

 The Dare

Judging_LTSIn the late summer of 2011, 18 brave tequila brands took up this challenge–

To appear on the first ever televised tequila reality show to share with the world their personal stories and to participate in a judged tasting competition to be named the Last Tequila Standing.

Rocky Road

As with most TV pilots and shows that are ahead of their time, Last Tequila Standing struggled to find a permanent network home.

“After a series of fits-and-starts, several failed business deals and cable company mergers that never happened, Last Tequila Standing was all but lost,” recounts Morales, a producer and one of the hosts of the show.

From the moment Season 1’s taping had wrapped, Morales worked tirelessly for months with the Executive Producers to try to fulfill the show’s original mission–

To educate and inform tequila aficionados worldwide in an entertaining fashion LTS_Cameraon the finer points of Mexico’s national spirit, as well as to help promote organic, artisanal, small batch, and boutique tequila Brands Of Promise(TM).

“But just a few years later, with the advent of streaming video made popular by services like Hulu, Amazon, and Netflix, the playing field has changed dramatically,” adds Lisa Pietsch, Tequila Aficionado Media’s COO in charge of social media marketing.  “Last Tequila Standing lends itself perfectly to our binge watching audience.”

The Line-Up

Participating tequila brands include…

Alquimia Organic Tequila, Alma de Agave, Crótalo, Cuestión, Don Pilar, Tributo, SilverCoin,  and many others.

In addition, Sal del Mar gourmet sea salt, Casa ZG sangrita mix, and Nature’s Agave syrup are also highlighted.

Guest Starring

Alquimia and Quinta de Gomez, organic tequilas.
Alquimia and Quinta de Gomez, organic tequilas.

Along with Tequila Aficionado Media’s CEO and Tequila Journalist, M.A. “Mike” Morales, Clayton J. Czczech guest judges on Last Tequila Standing.

Also on hand to impart his vast tasting expertise is industry expert Christopher Zarus, inventor of the only take home tequila tasting kit, TequilaRack, which will also be featured extensively.

A Global Event

“Since the taping of Season 1 of Last Tequila Standing, the Tequila Industry has aggressively pursued global expansion into countries like China, Russia, India, and Brazil,” explains Morales.

“Given that our audience is not only viewing Tequila Aficionado from these locations,” asserts Pietsch, “but all across Canada, the United States, Germany and Mexico, we can truly say that the airing of Last Tequila Standing will be a global event of epic proportions!”

 ***

Watch for new episodes of Last Tequila Standing premiering every day–for 45 days–beginning on National Tequila Day, July 24, 2015 at 11AM CDT.

 

[*Editor’s note: As a courtesy and at the request of Clayton J. Czczech, Tequila Aficionado has attempted to remove all videos and photographs in which he was featured without degrading the balance of the Last Tequila Standing content provided to us.] 

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Liquor Marketers Switch from Dutch Vodka to Azuñia Tequila

Originally Posted: 11/23/2009 by Nostrazarus at Tequilarack

By MICHAEL VOLPE Orange County Business Journal Staff

Two former executives of Aliso Viejo-based Nolet Spirits USA Inc., importer of Ketel One vodka, have traded martinis for margaritas. Kirk Gaither, former vice president of sales for Ketel One, and Jim Riley, former vice president of public relations and events for Ketel One, have started Newport Beach-based Intersect Beverage LLC, an importer of Azuñia Tequila from Mexico.

azunia tequila, regional tequila

The two started the business after being laid off. The pair left Nolet Spirits USA after the company’s Dutch vodka maker parent sold a 50% stake in 2008 to Britain’s Diageo PLC, which has taken over a lot of the vodka maker’s U.S. distribution and marketing work.

diageo spirits

Gaither and Riley secured a deal with Sergio Partida Zuniga and Liliana Partida, two members of a tequila making family in the Mexican state of Jalisco. They had approached Riley weeks prior to the Diageo deal about doing business.

“It was kind of like fate since Kirk and I had always talked about doing a side project together,” said Riley, chief executive at Intersect.

The tequila importer brought on Newport Beach-based Blue C Advertising to handle advertising, including social media campaigns and store displays.

azunia tequila, truck racing, bajaMarketing Azunia Tequila

“They hired us to do their ongoing integration into social media and retail marketing in bars and out of them,” said Eric Morley, principal at Blue C. Intersect is leaning on social media campaigns. The company has various campaigns including “Follow Jim Wednesdays,” where Riley offers to buy margaritas for anyone following him on Twitter, and “Margarita Mondays,” where the company posts a margarita recipe.

“Regular advertising doesn’t work for the spirits business when you’re trying to break into it,” Blue C’s Morley said. “You have to do something different.”

The ad shop is sending tequila to bloggers to taste and write about.

“The main objective is to get restaurants, night clubs and bars excited about carrying the brand,” Morley said. Riley plans to race an Azuñia Tequila truck in this year’s Baja 1000 off-road race.

 

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Originally posted November 22, 2009 by TequilaRack.

Please visit TequilaRack, a member of the Tequila Aficionado Flight of Sites.

 

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The Commoditization of Tequila Courtesy of Costco

kirkland tequila, costco, tequila aficionado, tequilarackWill KIRKLAND prove to be the category killer for high-end Extra Anjeo like it has for ultra-premium Vodka? As you can see from the below insert from December’s Costco Connection magazine, Kirkland 3 year Anjeo hits the shelves in select US markets. In CA it is currently selling for $23.99 per bottle.

I’m sure to buy one to put on my ever expanding Tequila shelf, most likely next to “Black Death Tequila” and others of similar ilk. I’m also sure to do a proper tasting and write down my thoughts to share with you as a future commentary to this article.

But the thought I have for you to ponder today is simply this: Why didn’t Costco start with Blanco? Blanco is the largest volume category style of 100% Agave Tequila by far. It is also much less expensive to produce, and much easier to maintain product consistency and taste profile (due to the differences in barrel wood, especially amplified over three years).

My best guess is that Costco wants to accomplish two things: apply pricing pressure to the high end that will ultimately drive down all other Tequila pricing, and… Costco does not want to mess around with the volume and profit surrounding the massive amounts of 1.75L Patron Blanco that it sells through its stores.

Your thoughts?

UPDATE:

So, as an update to our most recent topic above, “How low can the price of Tequila go?” now that the new Costco 3yr Anjeo is out in stores @ a very low $23.99/L. Simple Economics say that this pricing pressure at the high-end will no doubt exert pricing pressures throughout the tequila markets where Costco sell Liquor.

Well, I believe the next shoe, Premium Mixto Pricing, has just dropped.

In the mail today, courtesy of this week’s Ralph’s grocery flyer, Sauza Gold Premium Mixto is featured for a mere $6.39 a bottle with a -$3.00 instant redeemable coupon (that arrived in the same flyer bundle), for a net price to consumer of only $3.39 / 750ml. Stater Brothers Holiday Ad features Sauza for only $2.99 net after both a Southern Wine & Spirits -$3.00 in ad coupon plus the manufacturers -$3.00 instant redeemable coupon. At these prices, which are very near the cost of production after taxes, bottle cost, shipping, its really time to stock up on every segment now through Q1 of 2010.

Perhaps this is the answer, at least the near term, regarding the low end of Premium Mixto Tequila pricing.

If it gets any cheaper, we may all find ourselves giving a whole new meaning to “Two Buck Chuck”(up?) Tequila. – Z

A picture of the article can be found here: http://tinyurl.com/y9ngesy

Link to the Costco Connection article can be found here: http://tinyurl.com/yzyrrc6

The Distillery site is here: http://www.fabricadetequilasfinos.com/

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Originally posted November 29, 2009 by TequilaRack.

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Flights of Fortune: Correctly Executing Tasting Flights

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Originally posted October 1, 2010 by Chris Zarus of TequilaRack.

Please visit TequilaRack, a member of the Tequila Aficionado Flight of Sites.
tequila flights

Tasting Flights Take Off

From: Hotel F&B Marketing: Sprucing Up F&B Sales

Hotels find effectively merchandising food and spirits and getting staff involved in the story behind the product directly affects the bottom line.

By Mary Boltz Chapman, Contributing Editor — Hotels, 6/30/2009 11:00:00 PM

When The Peninsula Chicago began offering single-malt scotch flights, its public relations staff spread the word through local newspapers and magazines. Its finding, however, was that the best marketing is the buzz that spreads through the bar when someone orders it: Three 1-ounce pours in etched glasses are stacked on a handcrafted wooden ladder.

“We knew it would take off,” says Director of Food & Beverage Pradeep Raman. “We started getting regular guests ordering it, which attracts onlookers.”

The Peninsula created the flights and added them in October to try something unique for its guests, whom Raman describes as “urban yuppies. A mixture of affluent younger generation who come in with friends and businessmen entertaining clients.” Nine flights, ranging from US$25 to US$95, were assembled to take customers “on a journey.” Each flight holds three scotches ranging in complexity. They are grouped by region, body or tasting notes.

Raman says the flights are selling well, at a pace of about five to 10 on weekdays and 20 or more on weekend days. He credits in part the merchandising that happens when a guest sees someone else drinking it. The server or bar manager will walk customers through the experience, discussing each single malt and its characteristics. Guests also receive a card listing details on each scotch.

The handcrafted, etched glassware bearing the hotel’s name is prominently on display behind the bar, and bartenders are happy to tell inquiring guests about the flights.

Home-Grown Merchandising

Executive Chef Scott Walton grows vegetables and herbs in a deck garden for the hotel’s Markethouse restaurant. Taking a cue from the restaurant’s seasonal slant, Walton began infusing vodkas with fruits from local purveyors for the hotel bar, which was completed in December. A recent US$15 flight included raspberry, vanilla and pomegranate.

This summer, Walton will include infusions from the fruits of his own labor, such as lemon balm, chocolate mint and tomatoes. He also is planning a bacon-infused vodka with pork from a local farmer. Flights combine flavors from savory to sweet.

Walton says depending on flavor, the bar goes through a decanter of infused vodka every seven days. As at The Peninsula, glassware set out on the bar and customer buzz act as merchandising.

Full story here: http://tinyurl.com/ylacv34

 

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PaQui Tequila: Just Another Self Proclaimed Luxury Tequila?

luxury tequila, paqui, PaQui TequilaOriginally posted December 11, 2009 by Chris Zarus of TequilaRack.

In reading the article below today, I find myself curious to know, and understand, the key differences and distinctions between this new “Luxury” Tequila brand and all the many others that have traveled this road before it.  Perhaps you can distill it out of the below article or their website.

Please (really) post your comments back at the appropriate section below. I really want to know what I’m missing here.

I’m not trying to be a PaQui buzz kill, but much like life, unless a brand is born from “Luxury Linage”, it is a long, hard, “New Money” road to Luxury status.  So, you’re either born with it or you have to buy into it. And, for the many owners of Tequila Brands out there, they just don’t have the resources, or the patience, to make their way into Luxury Brand status.

Therefore, the bigger question here, “What does it really take to make a Luxury Tequila brand?” is at the core of what many in the biz fail to grasp completely.  They believe that if people like it and they price it the same as Patron, it somehow magically becomes so.  It is by far a more complex sum of factors that eventually, equates to a luxury brand, …or not.  It’s a dynamic process where the building of a luxury brand takes a lot of money, money, money, marketing, and time. Did I mention money?

So, just how does one go about building Luxury brand status for ones muy fabuloso Tequila?

Well, for those out there that care to know, here is the not so secret recipe to establishing a Luxury Tequila Brand:

Ingredients:

  • 1 Good quality Tequila recipe

  • 1 Good quality & consistent set of ingredients

  • 1 Good quality distillery

  • 1 Set of replicable processes that will produce a consistent, quality product

  • 1 industrial produced bottle, trademarked

  • 1 Consistent Message

  • Great Global Distribution system

  • Money ($10-20M/Yr.)

  • Time (10-20 years)

Directions

  1. Preheat distillery, add quality ingredients, apply good Tequila recipe. Stir

  2. Using replicable processes, make Tequila, set some aside in barrels to age

  3. While waiting for Tequila, produce distinctive trademarked industrial bottles and closures

  4. Use some of the money to buy into a great global distribution system

  5. Fill Tequila bottles and ship to Great Global Distribution system

  6. Sprinkle Consistent Message liberally with money, add Time

  7. Wait (about 10-20 years)

 

As always, your thoughts and comments are most welcome.  Now for the article:

Making People Happy Through Tequila? ‘PaQui’ Says ‘Si’

Dec. 10, 2009, Jeremy Nisen–HispanicBusiness.com

Dr. Javier Martinez was born in Mexico, but has lived in England. His journeys have taken him from the business sector into the study of politics, in which he earned his doctorate. But Dr. Martinez’s path has led him back home, at least in a career sense. While he currently lives in Los Angeles with his wife and children, he’s heard and answered the call of his family business. Dr. Martinez is the President and CEO of Tequila Holdings, Inc., the company behind the new luxury brand known as PaQui.

PaQui, which is an Aztec word for “to be happy,” is Dr. Martinez’s answer to the opportunity he sees in the American alcohol market. It’s been on the market for only five months, but its creation was a long time coming.

Starting in 1997, from his position as an importer and distributor of bulk tequila brands, Dr. Martinez saw the shift in the premium tequila landscape, wherein brands like Patron began to take off.

“We, in Mexico, were not realizing how exciting the word ‘tequila’ is to the American consumer,” said Dr. Martinez. “I sensed potential was huge in the U.S.” At about 6 percent of the market, luxury tequila is the fastest-growing category, says Dr. Martinez, “but the base is small.” His segment of the market, he believes, could be 10 percent in the next 10-15 years.

Patron, says Dr. Martinez, got the packaging right. With PaQui, he sees an opportunity to make a similarly beautiful bottle, but pair it with a tequila that he feels “represents the best of the industry.”

“I thought, ‘Let’s bring tequila back to tequila,'” Dr. Martinez explained to HispanicBusiness.com, noting that his priority is to highlight the agave,

“Vodka is neutral, for example,” he said, “but tequila — particularly white tequila — is very rich in flavor and aroma compounds.”

PaQui is made with a process he calls “selective distillation,” a method that his company spent two years developing. The result, said Dr. Martinez, is “very drinkable, clean, smooth, and finishes with ‘I need some more!”

It’s a far cry from the tequila many people aged 35 or older may have experienced. The perception imparted in the 1980s and 1990s by lower market brands, notorious for causing headaches, is what PaQui — and indeed the Mexico-based tequila industry in general — is attempting to overcome.

“The consumer trading up,” said Dr. Martinez, “for less quantity, more quality.” Those making high-end, premium tequila are attempting to answer that call.

For the neophyte premium tequila drinker, Dr. Martinez says “the ‘silvera’ first.” That will give the best idea of what the agave plant tastes like. From there, consumers can figure out how they prefer drinking it — trying it neat or with ice or in a margarita.

“One of the advantages of good tequila is that it’s very mixable,” Dr. Martinez advised. “You can mix it with almost anything and retain the characteristic of the tequila. Even in a margarita, you can tell what brand is being used. It’s an amazing spirit, unlike any other.”

After trying the silvera, Dr. Martinez said should a consumer want to experience “more exotic flavors,” try the “reposado,” which is slightly aged and retains some flavors imparted by the wood barrels used in the aging process. After that, one should try the “anejo,” which has been aged even more.

Source: HispanicBusiness.com (c) 2009. All rights reserved.

Read the rest here:

http://www.hispanicbusiness.com/news/2009/12/10/making_people_happy_through_tequila_paqui.htm#

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Originally posted December 11, 2009 by TequilaRack.

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Change is at Hand for the Tequila Market, Part II

 

tequila bubblePart II of II

Written by Chris Zarus of TequilaRack

The Economic Fall of the Medium Sized Producer

As the dooms day clock ticks down, all but the biggest distilleries, short on cash and heavy in liquid inventory, will soon be courting anyone with a US dollar. But that market is rather small, and unless the CRT (Consejo Regulador del Tequila, Tequila’s governing body) changes the law and allows 100% Agave Tequila to be bottled outside of the appellation area, the price of a “pipe” of 100% Agave Tequila will begin to drop faster and farther than that of its half brother mixto. Too much 100% Agave Tequila chasing too few in-zone buyers and/or bottlers will cause another price collapse, except this one will be a price collapse on the finished product.

As this scenario starts to unfold, a few things will begin to happen simultaneously:

1) The largest producers (top 5) will buy out the top 20 as their values will be diminished. Larger or well-financed producers will be able to buy out their smaller rival producers with little cash and mostly their own corporate stock. These bigger players will do this not just to shut down a competitor, but to get their hands on their vast value depressed inventory of 100% Agave Tequila for their own use, and perhaps get some under marketed brands of promise as a bonus to develop or sell.

2). The next tier of 25-75 producers will die out.

3) The smaller producers, like micro-distillers, will survive by remaining small and being content just making incredible craft Tequila.

mayan calendarTic Toc…

The Mayan calendar ends on Sunday, December 23, 2012.

“Both the Hopi and Mayans recognize that we are approaching the end of a World Age… In both cases, however, the Hopi and Mayan elders do not prophesize that everything will come to an end. Rather, this is a time of transition from one World Age into another. The message they give concerns our making a choice of how we enter the future ahead. Our moving through with either resistance or acceptance will determine whether the transition will happen with cataclysmic changes or gradual peace and tranquility...” — Joseph Robert Jochmans

First, let me start out by saying that I’m not the Nostradamus of Tequila, or “Z-Doctor-of-Death-&-Despair” that I was referred to as most recently.

However, as far as I’m concerned, the Mayan’s have it right regarding the current business economy of Tequila and its transition from one World Age into another. In my opinion, the Mayan’s prophesy that the end of the world is rapidly approaching for many in the Tequila system, is spot on.

bonded warehouse2012 The Mayan Curse of the US Bonded Warehouse

Many have already made their containers of US tequila brands and now they reside in bonded warehouses across the US, mostly in the Southwestern Border States (Arizona, California, New Mexico, and Texas). Few ever thought they needed to know that the US federal spirit taxes are due either prior to withdrawal or when the clock strikes five years, then the Tequila will be considered as invulnerably abandoned and shall be transferred into General Order Warehouse for liquidation.

The fifth year for many young Tequila importers has already begun; for others, it is fast approaching. My phone has already started ringing regarding pallets of product being liquidated. Trailer loads will be next. It seems that the US economic crisis almost exactly coincided with the CRT report of over 1200 Tequila brands. This inverse relationship of too many brands chasing a down world economy will, by my calculations, put the bulk of the bonded brands ready for liquidation near the end of 2012.

While the one container per month business plan is long lost, the taxes will come due. With no money left in the coffers, products will begin to liquidate. At first, prices will be reasonable, perhaps as high as $7.00 per 750ml. But prices will rapidly erode as a still saturated Tequila market will not be able to absorb the extra inventory. Prices will continue to decline for these unknown and ill-marketed brands.

I predict that the bottom feeders with cash will be able to get 100% Agave Tequila FOB (Freight on Board) bonded warehouse for as little as $3.14/750ml. Just enough to cover the federal taxes, plus $1 for the broker and warehouse fees.

exit strategyRun, Don’t Walk to the closest Exit Strategy

If any of the following describes your business, you need to be a seller or begin the shut down process:

  • You do not have a business plan, or the boilerplate business plan you bought states that you will sell 10-12,000 in the first year (and you are not even close in year two).
  • You are undercapitalized and do not have access to at least $1M per year for the next 10-20 years.
  • Your company does not own at least a portion of the distillery that produces your product.
  • You have pre-ordered and pre-paid for containers of product at a price higher than you could buy it for today (or tomorrow).

If however, any of the following describes your company, you may be a survivor:

  • You’ve won PowerBall or similar lottery and have the resources to stay afloat for 8-10 more years.
  • You have distribution in most of the US states and Duty Free.
  • Your brand is backed by a very large multinational corporation.
  • You, your distillery, and your brand have generations of lineage.

My recommendation for all those that do not have at least $10M worth of investment to weather the storm? Find the funding or get out while you still have your home and sanity. The Tequila market will remain saturated until at least 2016. Pricing will continue to drop in order for Tequila to compete with other spirits categories, primarily vodka and rum.

This is a Time of Transition from one Tequila World Age into Another

The Future Ahead

Unless some government interference changes the course of this tsunami and rescues the lot, 100% Agave Blanco Tequila pricing will fall in line with other white spirits, vodka and rum, with the bulk of the volume at $9.99 per 750ml for the low-end, and $29.99 at the Grey Goose/Belvedere high-end. Aged Tequilas will march down in lockstep to accompany their Blanco brethren at a $5-$10 spread on the shelf. Exotic Tequilas will still command higher prices, but the volume to run a business will be the same range as vodka.

How should we enter the New Age of Tequila Transition?

An updated industry survey showed that nearly 100 percent of respondents feel drinkers are now more focused on value. Only 75 percent felt similarly last year, according to the annual survey conducted by Robert Smiley, director of wine studies at University of California-Davis.

With continued education and time, Tequila will mature into its own. Maturity will cause a further divergence in pricing for Tequila. Mixto will remain the mixer of choice as prices continue to decline so that only mega producers of mass volume will be able to make any money. The money-makers in this segment will have to go to larger, more efficient containers beyond 1 and 1.75 liters. Think of large, aseptic packaging such as boxed wines and bigger. Also, kegs of mixto Tequila, like beers, in up to 50 liter sizes.

Blanco, and perhaps to some extent Reposado 100% Agave Tequila styles, will begin to follow the pricing of other mainstream spirits, vodka and rum. In this $9.99 – 29.99 price category volumes will grow. The big players are already in this segment with Patrón, Cazadores, Cuervo’s Azul and 1800, Sauza’s Hornitos, Brown-Forman’s El Jimador, and the new Gallo entry, Camarena. This category with be dominated by the big manufacturers that have the distribution muscle and can afford the promotions support of at least $10M per year.

Sure, there will be other Blanco’s in the stores, but unless they are store supported as a “house brand,” volumes will be relegated to 5-10% of the segment. Why buy a $39.00 Blanco when you can get an Añejo at the same price? Yes, some will continue to buy Patrón Blanco, but the pricing will fall to that of comparable high-end vodkas like Grey Goose and Belvedere, at least a $10 discount from today’s price, about $29.99 per 750ml in the volume liquor and chain grocery stores.

Añejo, and extra-aged products, will begin to command the ultra premium price points and above. Moreover, Añejo’s (Tequila and Mezcal) will begin to follow pricing similar to Irish and Scotch Whiskey, with its own price segmentation based on perceived quality and marketing. This will be the market of the small survivors with the ability to make consistently great, aged craft Tequila.

As the clock ticks down to the end of 2012, a new world order is approaching. It may come gradually enough for some that it is hardly noticed until it’s too late. I foresee the slow starving of all but the nimble and mighty Tequila brands, producers and farmers alike.

Some will fight this impending consolidation, I’m sure. But this change will come nonetheless, and it will be a profitable event for the few that survive their trip through the sucker hole. I myself have decided to remain nimble, strapped into my dingy, Riedel in hand, waiting out the storm.

Copyright 2010 International Tasting Group (ITG), All rights reserved. Unless otherwise noted, ITG is the legal copyright holder of the material on our blog and it may not be used, reprinted, or published without our written consent.

Links

SPIRITS TRENDS

U.S. Spirits Market 2008, Gross Revenues by Price Category

http://www.discus.org/pdf/2009IndustryBriefing.pdf (This is the most recent report by DISCUS for 2009. Tequila volume is still listed as 4th.)

http://www.thefreelibrary.com/Spirits+fast+track+brands.-a0144204154 (shows Patrón reaching 119K cases in volume in 2001.)

http://archive.cyark.org/2012-understanding-the-maya-calendars-blog

http://www.forgottenagesresearch.com/index.htm

http://www.nostradamus.org

http://www.oceanfreightusa.com/topic_impg.php?ch=19 (Bonded warehouses.)

http://dsc.discovery.com/news/2009/02/09/tequila-agriculture.html (agave farmers)

http://www.yankelovich.com/ (state of the consumer)

tequilarack

 

Originally posted October 1, 2010 by Chris Zarus of TequilaRack.  This is considered a standard in the industry and is even more relevant today.

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Change is at Hand for the Tequila Market, Part I

tequila market, masa azulPart I of II

Written by Chris Zarus of TequilaRack

Tequila Brands and Producers Have Already Sailed Into the Sucker Hole

For those new to the expression, a “sucker hole” is a colloquial term referring to a spate of good weather that “suckers” sailors into leaving port just in time for a storm to resume at full force and wreak havoc on the ship and crew.

For both Tequila Brand Owners and producers of a certain size, their ship has already sailed, and the storm is now closing in on them. Some in denial, others looking through rose-colored margarita glasses, still believe they can navigate through to that glimmer of light on the horizon. However, the perfect storm of doom looms just past the horizon of hope, and will soon envelope and destroy most, if not all, in its wake.

Oh, and that’s the good news. The bad news is that only a few of the big and the very nimble will survive.

This is because of a number of factors, primarily that too many of us bought in to the Yankelovich and similar studies that declared premium and above 100% Agave Tequila brands as the next big thing.

While the premises of these market premonitions were undoubtedly true, too many of us jumped headfirst into the juice just before the world economic decline. Six hundred brands have turned into 1200 brands in less than five years. The growth of the market has been dramatic compared with other distilled spirits, yet, it’s still relatively small, ranked only 4th in US volume. It has not grown fast enough to accommodate all of the entries into the field.

Resistance is Futile – Change is at Hand for the Tequila Market

train wreckThe Gravy Train Wreck Ahead

I’m sure that for many of you, in just reading the title of this article, your blood pressure has escalated, and you may already be misdirecting your anger at the author.

For others who have experienced the many similar economic paths to consolidation in the global beverage industry, you have already accepted that change has to occur, and you will soon better understand and appreciate the math behind what I am about to lay out, and why everything I’m about to outline here will happen in due course.

For those of you who have your personal fortunes riding on the Tequila Train, both prominence and profit may still seem to be so close that you think you can see the light at the end of the tunnel, or beyond the next bend. But, I’m sorry to say that for most of us in the biz, the light at the end of the tunnel is that of an oncoming locomotive. This will be a catastrophic collision, albeit in slow motion, that will drain your resources and your resolve.

iwsrWhat can be learned from the Russians? (Excerpted from JustDrinks.com)

The global economic crisis has had a significant impact on the Russian spirits market, changing market dynamics and briefly halting the much-lauded premiumisation trend, according to current research.

A recently released report from the International Wine and Spirit Research (IWSR) on Russia’s spirits market claims that the downturn has also led to “…disruptions across the supply chain, with many suppliers and distributors going bankrupt or halting production. For healthier companies, however, it has presented an opening to establish their brands and take market share…”

cloud liningThe Silver Tequila Clouds have a very Dark Lining (Excerpted from Global market review of Tequila – forecasts to 2013 www.researchandmarkets.com )

The history of the Tequila industry has been one of boom and bust. Sales rose during the 1940’s only to collapse again in the mid-50’s. Export sales rose steadily from the 1960’s onward, although domestic sales fell sharply in the 1980’s due again to an economic slump, and the severe Mexican economic crisis of the early 1980’s resulted in plummeting sales.

The market was again disrupted by a critical shortage of Agave beginning in the late ’90’s, which served to hold back the category’s international development as brand owners were forced to divert limited supplies to the core US market, and quality perceptions were damaged as some manufacturers moved from 100% to 51% (Mixto) Agave products.

Today, that dynamic is in reverse, and the market is in oversupply. More and more 100% Agave products are coming into the market. This is helping to raise quality perceptions, and in turn, demand is surging not only in core Mexican and US markets but across a number of other countries.

The outlook for the category has rarely been better, and Casa Noble Tequila president and COO David Ravandi commented, “Tequila is entering a stage of consolidation in the world markets. It is no longer a fad. The fact that 100% Agave Tequila exports have increased tremendously over the last two years is extremely positive for the product’s outlook in the years to come.”

US Tequila Importation is a Sucker Bet

tequila history, santa fe“My cousin will make the best Tequila for you Mr. Gringo”

“So, my friend, you want a great Tequila brand? We will make it for you. Just fifty percent cash up front to start the process.”

Unfortunately, far too many have fallen for this old gag. Relying heavily on the forecasting reports of the early 2000’s that suggested that luxury Tequila would be the next big spirits category after vodka.

With dollar signs in their eyes, the believers drank the Tequila Kool-Aid, most of them spending way too much to buy a brand, custom molded bottles, etc. But the worst part was that this left little if any money for marketing. Many did not even understand brand marketing inflation was happening right under their noses.

It had started soon after Patron hit 100,000 cases in volume in 2001, and the cost to market a Tequila brand in the US went from $1 to $10M per year. Today it takes at least $20M per year just to play in the same ballpark as Patron’s $50M plus, Sauza’s $35M plus, and Cuervo’s $30M plus marketing budgets.

Who could have predicted that a “realistic” business plan for the next successful ultra-premium Tequila brand calling for only 10,000 cases in the first year would end in it’s investors taking a bath?

The problem with this equation is three-fold:

1) Pricing: Unlike vodka and white rum, 100% Agave Tequila is just too expensive to produce and bottle in Mexico. Unless, like rum, vodka and mixto Tequila, it is able to be shipped in bulk and bottled near the final consumer, the cost involved with 100% Agave Tequila is always going to be too high to attain critical volume and profit levels.

2) Volume: US mass volumes are best when a spirits category is between $9.99-29.99/750ml. One hundred percent Agave Tequila is currently profitable only at the upper ranges when higher volumes are attained.

3) Distribution: The US “3-Tier” Distribution System is at best an oligopoly, and 19 states run a monopoly. Of the 1200 plus Tequila brands, want to guess how many they want to carry? Well, after the top 20, you are very lucky to be “special order only”. If you are fortunate enough to live in the states of California or Arizona, where one can be both the importer and distributor, you will find yourself driving your precious Tequila brand around to each account in your car.

Without product volumes or market clout, you will be hard pressed to get even an appointment, let alone a vender number with the chain restaurants and grocery stores. These major chain stores like Chili’s, Chevy’s, Costco, Kroger, etc., drive at least 85% of the combined volume in all but the control states. Without access to the chains, your market becomes the handful of privately owned, “Mom & Pop” accounts that usually know that small independent distributors are easy prey for bending the law on consignment, stringing out payments, or not paying at all.

While driving your own brand around certainly makes time for the personal touch and focus, these hand-selling efforts prove to be the most inefficient ways to distribute one Tequila brand. Your glass ceiling to fame and fortune becomes that next level of chain distribution that can only be had by a state-wide delivery system of the large wholesale distributor.

With Tequila segment Pricing, Volume and Distribution all against you, one will need to have a lot more money than the brands of the past in order to simply survive in the US.

Tanks-a-lot for Nothing

Call the tank maker and raise your stocks of liquid now!

no masUnfortunately, most of the mid-sized Tequila distilleries have bought into the notion that Agave prices will go up in the very near future. They base this notion on the boom and bust cycle of the past, and like Lehman Brothers, believe that they have successfully timed the market.

Greedily, many producers are now mortgaged to the hilt in order to produce all the Tequila that they possibly can afford to store in stainless tanks or wooden barrels. Fear of the impending Agave price increase that has yet to happen (and may not for many, many years) has seemingly forced them all into a squirrel-like stockpiling frenzy.

Are they storing Blanco, like acorns, for the hard winter ahead? These stored nuts of liquid demise are in reality winds conspiring to produce the perfect storm for all but the most financially secure and/or nimble producers.

Copyright 2010 International Tasting Group (ITG), All rights reserved. Unless otherwise noted, ITG is the legal copyright holder of the material on our blog and it may not be used, reprinted, or published without our written consent.

Links

SPIRITS TRENDS

U.S. Spirits Market 2008, Gross Revenues by Price Category

http://www.discus.org/pdf/2009IndustryBriefing.pdf (This is the most recent report by DISCUS for 2009. Tequila volume is still listed as 4th.)

http://www.thefreelibrary.com/Spirits+fast+track+brands.-a0144204154 (shows Patrón reaching 119K cases in volume in 2001.)

http://archive.cyark.org/2012-understanding-the-maya-calendars-blog

http://www.forgottenagesresearch.com/index.htm

http://www.nostradamus.org

http://www.oceanfreightusa.com/topic_impg.php?ch=19 (Bonded warehouses.)

http://dsc.discovery.com/news/2009/02/09/tequila-agriculture.html (agave farmers)

http://www.yankelovich.com/ (state of the consumer)

tequilarack

Originally posted October 1, 2010 by Chris Zarus of TequilaRack.  This is considered a standard in the industry and is even more relevant today.

Please visit TequilaRack, a member of the Tequila Aficionado Flight of Sites.

 

 

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Alcohol May Reduce Men’s Heart Risk

Study Shows Moderate Drinking Cuts Risk of Heart Disease in Men by 51%

By Kathleen Doheny, WebMD Health News

Nov. 18, 2009 — Regular consumption of alcohol — beer, wine, or hard liquor — reduces the risk of heart disease in men by a third or more, according to a new Spanish study.

heart risk, health, drinking, tequila”Our study confirms what many other studies have already said,” says researcher Larraitz Arriola, MD, of the Public Health Department of Gipuzkoa in San Sebastian, Spain. One difference, she says: Researchers in the new study separated ex-drinkers from lifelong teetotalers in hopes of better understanding the alcohol- heart health link.

Arriola and colleagues also found a beneficial effect of alcohol for women’s heart health, she says, but it was not strong enough to be considered statistically significant. She suspects it’s because of the relatively low number of women in the study who developed heart disease.

While drinking was associated with heart health, Arriola is quick to offer this caveat: ”I would not advise anybody to [start to] drink alcohol, because alcohol causes, as we mention in our paper, 1.8 million deaths a year” in addition to disabilities.

“If somebody already drinks alcohol, then I would advise to drink moderately, eat healthy food, and do some exercise.”

In the study, researchers evaluated more than 41,000 men and women enrolled in the ongoing European Prospective Investigation into Cancer (EPIC) study. That study includes a half million adults living in 10 Western European countries.

In the current research looking at alcohol and heart health, the researchers evaluated 15,630 men and 25,808 women ages 29 to 69,  all free of heart disease at the beginning of the study, following them for a median of 10 years (half longer, half less).

The researchers calculated alcohol intake from a diet history record; a follow-up revealed which participants had a cardiovascular event — either a heart attack or unstable angina (chest pains) that required a procedure such as a bypass operation or angioplasty.

During the follow-up, 609 such events occurred to 481 men and 128 women.

Spain has low heart disease death rates in comparison to some other countries, but high levels of alcohol consumption.

Amount of Alcohol and Heart Risk

Drinking any type of alcohol lowered the risk of serious heart disease in men, with the amount of risk reduction associated with the amount of alcohol:

  • Light drinking reduced risk by 35%
  • Moderate drinking reduced risk by 51%
  • High and very high levels of drinking reduced risk by 54% and 50%.

Former drinkers had a 10% risk reduction.

For the study, the researchers considered a drink as an alcoholic beverage with 10 grams of alcohol, the U.K. standard, Arriola says. In the U.S., a standard drink is equal to 13.7 grams of alcohol, according to the CDC.

heart risk, heart disease, heart health, tequilaRoughly, here is how Arriola defines her categories:

  • Light drinking was up to 5 grams a day — or about one glass of wine, one and one-half beers, or less than a half glass of hard liquor.
  • Moderate drinking was 5 to 30 grams a day, or about two glasses of wine, two or three beers, or a half to one glass of hard liquor.
  • High and very high levels of drinking were 30 to 90 grams a day, or about five or more glasses of wine, seven or more beers, and one to one and a half glasses or more of hard liquor.While the type of alcoholic beverage consumed, overall, did not have an effect on the level of risk reduction, the researchers found the protection greater for those drinking moderate to high levels of alcohol, which included beverages other than wine alone.The study results replicate many other studies, according to Kristi Reynolds, PhD, MPH, a research scientist and epidemiologist at the Kaiser Permanente Southern California Medical Group. But she points out that heavy alcohol consumption carries many risks.In an email, she writes that heavy alcohol consumption has been shown in other studies to lead to increased illness and death from other causes. “Therefore, the implications of these findings should be examined cautiously. Advice regarding alcohol consumption should be tailored to the individual patient’s risks and the potential benefit.”

 

tequilarack

 

Originally posted November 20, 2009 by TequilaRack.

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Tequila Pricing: How Low Can It Go? (The Math Behind Cheap Tequila)

tequila pricing

Written by Chris Zarus of TequilaRack

I just got off the phone with an old industry Pal and we were talking back and forth about Tequila pricing. Not just any pricing, but the pricing at the low end of 100% Agave Tequila in the state of California. I had just gotten back from a trip to Jons Market (http://jonsmarketplace.com/) and had seen Morales 100% Agave Blanco and Reposado on display for $7.99 a liter. You can see a picture of it I took with my phone here: http://twitpic.com/6ie5fi

For those interested, below is what the corrected math looks like on importing the cheapest case of six 1Liter bottles of Tequila 100% Agave into Southern California with every tier (Distillery, Importer, Distributor & Retailer) making their full 30% gross margin, which is what is typical for an unknown brand:

Item

US Dollars

Tequila liquid cost/bottle

$ 0.50

Paper label/cap/bottle

$ 1.00

FOB /Bottle cost

$ 1.50

Importer Cost/Case

$ 9.00

Transportation to US Border

$ 3.77

Customs Clearance

$ 0.50

Transportation to US Warehouse

$ 0.50

Warehouse Fee

$ 0.30

Back Office

$ 0.30

Federal Excise Tax

$ 17.12

Importer Laid-in Cost

$ 31.49

Importer Margin

$ 13.50

Price to Distributor

$ 44.99

Freight to Distributor

$ 0.50

State Tax

$ 5.23

Tax-Other

$ –

Distributor Laid-in Cost

$ 50.72

Distributor Margin

$ 21.74

Price to Retailer

$ 72.45

Retailer Margin

$ 31.05

PTC (Price To Consumer/Case)

$ 103.50

PTC (Price to Consumer/bottle)

$ 17.25

 

If you understand the numbers above, then you can plainly see that it is impossible for a bottle of Tequila to be on the shelf for sale in California for under $17.25 per liter. So how do they do it? How is it that we can find so many bottles below this $17.25 threshold price? Well, it first starts with a reduction in margin at every tier in the equation. This is only possible for a known, volume brand of at least a container per month in US volume. For high volume brands, the equation should look similar to this:

Item

US Dollars

Tequila liquid cost/bottle

$ 0.30

Paper label/cap/bottle

$ 1.00

FOB /Bottle cost

$ 1.30

Importer Cost/Case

$ 7.80

Transportation to US Border

$ 2.50

Customs Clearance

$ 0.20

Transportation to US Warehouse

$ –

Warehouse Fee

$ –

Back Office

$ 0.05

Federal Excise Tax

$ 17.12

Importer Laid-in Cost

$ 27.67

Importer Margin

$ 7.80

Price to Distributor

$ 35.47

Freight to Distributor

$ 0.25

State Tax

$ 5.23

Tax-Other

$ –

Distributor Laid-in Cost

$ 40.95

Distributor Margin

$ 11.55

Price to Retailer

$ 52.51

Retailer Margin

$ 14.81

PTC (Price To Consumer/Case)

$ 67.32

PTC (Price to Consumer/bottle)

$ 11.22

 

So, with a volume brand, all tiers, producer, importer, distributor and retailer reducing their margin to 22% each, the best price on the shelf is $11.22/Liter.

So how is it that we have $7.99/liter pricing on the shelf at retail in Southern California? How can they possibly do it? Your comments below are much appreciated before I do the reveal. What I will also show is the new range (new age?) of Tequila pricing that, if you spot it on the shelf, you will know that the brand is either being liquidated (or if back by a larger company is being introduced). In almost every scenario, with the exception of a new brand launch, the importer or distributor is supporting this loss was left holding the bag (inventory) and has lost all of their investment in the inventory.

If you are a small US importer or importing distributor of Tequila, pricing such as this can be very disturbing and are confirmation of my previous predictions found in this blog. It’s time to seek shelter and/or strap yourself firmly to the yardarms and cut all costs. Hang on for the ride of your (and your brand’s) life. Good Tequila will be available for below actual cost of production/tax/shipping for at least two more years, maybe more.

You as a brand owner have to be very attentive to your price and pricing models, but more importantly your actual profit. You have to have a line item for free samples, events, competitions and other marketing costs which are not even captured here in this exercise as we are assuming lowest cost pricing models. If you are a brand owner and have a business plan that states that your brand will sell 10,000 ce’s in its first year and will be profitable in anything less than 20 years from inception, you have already bought a losing lottery ticket.

If any of the above rings true for your brand, please contact me, I may be able to assist.

 

tequilarack

 

Originally posted by Chris Zarus of TequilaRack on September 15, 2011 by TequilaRack.

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How to Get Paid to Drink Tequila:

How you can turn your passion into profits and get paid to drink tequila as a blogger, vlogger, podcaster or author

 

Salud!!